ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-1, KOTA V. M/S SHREE AGENCIES PVT. LTD., KOTA

ITA 950/JPR/2018

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 7975 (ITAT-JAIPUR)
• Duration Of Justice: 4 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-12-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 09-08-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAN SINGH
• Keywords: Audit objection; Earning of tax free income; Tax effect
• Section: 14A

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE -B, JAIPUR JH FOT; IKY JKO ] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA-@ ITA NO. 950/JP/2018 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2011-12 ASSTT. COMMISSIONER OF INCOME-TAX, CIRCLE-1, KOTA. CUKE VS. M/S SHREE AGENCIES PVT. LTD., B-45, I.P.I.A. JHALAWAR ROAD, KOTA. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AAFCS3329A VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS @ REVENUE BY : SHRI RAN SINGH (ADDL.CIT) FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI P. C. PARWAL (CA) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 10/10/2018 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT : 31/12/2018 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF LD. CIT (A), KOTA DATED 18.05.2018 FOR ASSESSMENT Y EAR 2011-12 WHEREIN THE REVENUE HAS TAKEN THE FOLLOWING GROUNDS OF APPEAL:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN:- (I) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 11 ,38,784/- MADE BY THE AO U/S 14A READ WITH SECTION 8D. (II) THE APPELLANT CRAVES LIBERTY TO RAISE ADDITIONAL GR OUND AND TO MODIFY/AMED THE GROUND OF THE APPEAL AT THE TIME OF HEARING. ITA 950-JP-2018 ACIT, KOTA VS MS SHREE AGENCIES PVT. LTD., KOTA 2 THE ISSUE FALLS UNDER EXCEPTION AS MENTIONED IN PAR A 10(B) OF BOARDS CIRCULAR NO. 3/2008 DATED 11.07.2018. 2. AT THE OUTSET, THE LD. AR ON BEHALF OF THE ASSES SEE HAS RAISED AN OBJECTION REGARDING MAINTAINABILITY OF THE APPEAL O F THE REVENUE DUE TO THE TAX EFFECT NOT EXCEEDING RS. 20 LACS AS PER THE CBDT CIRCULAR NO. 3 OF 2018 DATED 11TH JULY, 2018. 3. THE LD. D/R HAS FAIRLY SUBMITTED THAT THE TAX EF FECT INVOLVED IN THE REVENUES APPEAL IS LESS THAN RS 20 LACS WHICH IS P RESCRIBED THRESHOLD LIMIT IN TERMS OF THE CBDT CIRCULAR NO. 3/2018 DATE D 11TH JULY, 2018 ISSUED IN SUPERSESSION OF ITS EARLIER CIRCULAR NO. 21 OF 2015 DATED 10.12.2015. AT THE SAME TIME, HE SUBMITTED THAT THE MATTER FALLS IN EXCEPTION (B) TO PARA 10 OF THE SAID CIRCULAR WHICH READS AS UNDER: 10. ADVERSE JUDGMENTS RELATING TO THE FOLLOWING IS SUES SHOULD BE CONTESTED ON MERITS NOTWITHSTANDING THAT THE TAX EF FECT ENTAILED IS LESS THAN THE MONETARY LIMITS SPECIFIED IN PARA 3 A BOVE OR THERE IS NO TAX EFFECT: (A) WHERE THE CONSTITUTIONAL VALIDIT Y OF THE PROVISIONS OF AN ACT OR RULE IS UNDER CHALLENGE, OR (B) WHERE BOARD'S ORDER, NOTIFICATION, INSTRUCTION OR CIRCULA R HAS BEEN HELD TO BE ILLEGAL OR ULTRA VIRES, OR (C) WHERE REVENUE AUDIT OBJECTION M THE CASE HAS BEEN ACCEPTED BY THE DEPARTMENT, OR (D) WHERE THE ADDITION RELATES TO UNDISCLOSED FOREIGN ASSETS/ BANK ACCOUNTS. 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IT IS OBSERVED THAT THE DEMAN D/ TAX EFFECT IN THE REVENUES APPEAL IN QUESTION ARISING OUT OF ORDER P ASSED BY THE LD ITA 950-JP-2018 ACIT, KOTA VS MS SHREE AGENCIES PVT. LTD., KOTA 3 CIT(A) IS BELOW RS. 20.00 LACS . UNDER THE POWERS V ESTED BY SECTION 268A(1) OF THE I T ACT, CBDT HAS ISSUED CIRCULAR NO . 3/2018 DATED 11TH JULY, 2018 (F NO. 279/MISC. 142/2007-ITJ(PT) INSTRU CTING THE AUTHORITIES BELOW THAT DEPARTMENTAL APPEAL SHOULD NOT BE FILED BEFORE ITAT WHERE THE DEMAND/TAX EFFECT DOES NOT EXCEED RS. 20 LACS. THE CIRCULAR IS SPECIFICALLY MENTIONED TO BE APPLICABLE FOR ALL PEN DING APPEALS. 5. SUBJECT TO SOME EXCEPTIONS, IT IS FURTHER DIREC TED BY CBDT THAT ALL THE DEPARTMENTAL APPEALS PENDING BEFORE ITAT WHERE THE DEMAND/TAX EFFECT IS NOT EXCEEDING RS 20 LACS SHOULD BE EITHER WITHDRAWN OR NOT PRESSED BY THE DEPARTMENTAL REPRESENTATIVES. 6. REGARDING THE CONTENTION OF THE LD. DR THAT THE PRESENT CASE OF THE REVENUE FALLS IN EXCEPTION 10(B) OF THE AFORESA ID CBDT CIRCULAR, WE FIND THAT THE SAID EXCEPTION TALKS ABOUT CASES WHER E BOARD'S ORDER, NOTIFICATION, INSTRUCTION OR CIRCULAR HAS BEEN HELD TO BE ILLEGAL OR ULTRA VIRES. IN THE PRESENT CASE, THE LD CIT(A) HAS DECI DED TO FOLLOW THE RATIO LAID DOWN BY VARIOUS COURTS AND HELD THAT SECTION 1 4A DISALLOWANCE IS WARRANTED WHERE THERE IS NO EXEMPT INCOME AND HAS N OT FOLLOWED THE CBDT CIRCULAR NO. 5/2014 DATED 11.2.2014. THE LD C IT(A) FIRSTLY IS NOT AN AUTHORITY TO HOLD SUCH CIRCULAR AS ILLEGAL OR UL TRAVIRES AND SECONDLY, AS WE HAVE NOTED ABOVE, HE HAS DECIDED NOT TO FOLLOW T HE SAID CIRCULAR AND HAS FOLLOWED THE RATIO LAID DOWN BY VARIOUS COURTS. THERE IS THUS A DISTINCTION BETWEEN HOLDING A CIRCULAR AS ILLEGAL A ND NOT FOLLOWING THE SAID CIRCULAR IN LIGHT OF COURT RULINGS. IN LIGHT O F THE SAME, THE PRESENT APPEAL IS NOT COVERED BY ANY EXCEPTIONS MENTIONED I N THE SAID CBDT CIRCULAR. SINCE THE TAX DEMAND IN DISPUTE IS BELOW THE LIMIT SET OUT BY CBDT, APPEALS OF THE DEPARTMENT IS NOT MAINTAINABLE IN VIEW OF CBDT ITA 950-JP-2018 ACIT, KOTA VS MS SHREE AGENCIES PVT. LTD., KOTA 4 CIRCULAR NO. 3 OF 2018 DATED 11.07.2018. ACCORDINGL Y, THE APPEAL OF THE DEPARTMENT IS DISMISSED AS NOT PRESSED/WITHDRAWN. ORDER PRONOUNCED IN THE OPEN COURT ON 31/12/2018. SD/- SD/- FOT; IKY JKO FOE FLAG ;KNO (VIJAY PAL RAO) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 31/12/2018 *GANESH KR. VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- THE ACIT, CIRCLE-01, KOTA 2. IZR;FKHZ@ THE RESPONDENT- M/S SHREE AGENCIES PVT. LTD., KOTA 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO. 950/JP/2018) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR